Oil spill hearing today to bring out blame issues

Spill hearing to bring out blame issues

JENNIFER A. DLOUHY, WASHINGTON BUREAU

Published 5:30 am, Tuesday, May 11, 2010

WASHINGTON — As congressional hearings on the Deepwater Horizon disaster kick off today, lawmakers are likely to get a tangle of finger-pointing from the corporate leaders whose companies are being sued for negligence in connection with the disaster.

In prepared testimony obtained by the Chronicle, the officials trade blame over what went wrong, with rig owner Transocean suggesting cement casing by Halliburton was key and Halliburton insisting BP is the ultimate responsible party.

BP America's chairman, Lamar McKay, is expected to focus on the failure of the blowout preventer, a 450-ton piece of equipment used on oil and gas wells worldwide as a fail-safe protection against spills.

“All of us urgently want to understand how this vital piece of equipment and its built-in redundancy systems failed and what measures are required to prevent this from ever happening again,” McKay said in prepared testimony that appears to shift blame to Transocean and Cameron, which made the blowout preventer.

McKay is expected to pledge to share the findings of BP's internal investigation.

“We are working to piece together what happened from meticulous review of the records of rig operations that we have” as well as witness statements, McKay is expected to tell the Senate Energy and Natural Resources Committee.

At least a half dozen congressional committees plan hearings on the spill in coming weeks, with several already probing the cause of the disaster. The congressional investigations dovetail with a government inquiry by the Coast Guard and the Minerals Management Service, which are set to hold public hearings today and Wednesday in Kenner, La.

Engineers, a Coast Guard search and rescue specialist and MMS inspectors are among the 13 witnesses scheduled to testify there.

Swiss-based Transocean owned and operated the Deepwater Horizon rig. Halliburton, an oil field services company, was responsible for encasing the underwater well in cement and sealing it off. And Cameron manufactures blowout preventers. Along with BP, all are being sued for their possible liability in the disaster.

Possible problems

In prepared testimony, the corporate leaders point to a series of possible problems.

McKay highlights the failure of Cameron's blowout preventer to shear off or squeeze together pipe and stop the gushing oil.

Halliburton's Probert notes that “the construction of a deep-water well is a complex operation involving the performance of numerous tasks by multiple parties,” but ultimately “the well owner's representative” — BP— has the final say on “how and when various activities are conducted.”

Transocean's Newman suggests problems with the cement or casing may have been to blame, pointing to Halliburton.

“Without a disastrous failure of one of those elements, the explosion could not have occurred,” Newman is set to say. “Critical questions” include “what caused that catastrophic, sudden and violent failure, was the well properly designed, was the well properly cemented” and “were there problems with the well casing?”

He also is set to emphasize that “all offshore oil and gas productions begin and end with the operator,” BP.

Under a 20-year-old law governing oil spills, BP is the “responsible party” tasked with shouldering the costs of containing the leak and cleaning up the Gulf Coast because the company leased the Deepwater Horizon rig and the tract of land in which it was operating.

The company said Monday it had already spent $350 million to clean up the oil, stop the spill and for other activities — including about $3.5 million paid in claims to fishermen and other coastal residents and a total of $100 million in four separate block grants to Louisiana, Alabama, Mississippi and Florida.

BP says cap not priority

The 1990 oil spill statute limits BP's liability for economic damages — such as lost profits by seaside businesses — at $75 million, though some lawmakers are pushing legislation that would retroactively raise it to $10 billion.

Monday, David Nagel, the executive vice president of BP America, told reporters the company was “not thinking about a top cap on the claims of $75 million.”

“This is a terrible accident,” Nagel said. “And some thinking about a $75 million liability is not where our head is at. We're thinking about getting the right thing done.”

Rep. Ed Markey, D-Mass., said congressional hearings will shed light on what happened and why. But ultimately, he said, even though several companies were involved, “BP is going to have to shoulder much of the responsibility for what happened.”